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Two senior members of a Forest Hills church pleaded guilty last week to swindling more than $9.3 million from elderly parishioners, the U.S. attorney’s office in Brooklyn said.
Robert Riddle, 60, and Timothy Smith, 36, face five years in prison for encouraging members of the Local Christian Assembly Church on 70th Avenue in Forest Hills to invest money in two hedge funds the men started, the U.S. attorney’s office said.
After persuading the seniors to invest in the bogus Logos Multi-Strategy and Donum Fund, the individuals then spent their fellow congregation members’ money on such items as a $200,000 Bentley and renovations of their Uniondale, L.I., office totaling $1.6 million, U.S. Attorney Benton Campbell said.
They also used investor funds to purchase jewelry, clothing and meals, according to the government.
“These defendants abused their positions of influence and trust to solicit investments by fraud and line their own pocket,” Campbell said in a statement issued when the church members were indicted by a federal grand jury on charges of conspiracy and securities fraud in April.
Riddle and Smith encouraged the investors to transfer their retirement savings or take out home equity loans so they could invest more money, according to the indictment. Riddle and Smith had originally said investors needed to have a minimum investment requirement of $500,000 and would be marketed only to accredited investors having a net worth in excess of $1 million, prosecutors said.
But the individuals marketed the funds predominantly to the members of their church congregation, most of whom could neither afford the $500,000 minimum investment nor meet the net worth requirement.
According to the indictment, Riddle allegedly advised one victim to take out a mortgage totaling more than $500,000 on the victim’s house in order to invest in the Logos Fund. Riddle had promised the victim a 75 percent profit on the investment, according to prosecutors.
Three defendants remain in this case who also were indicted by the federal grand jury, including Aaron Riddle, 34; Joseph Coleman, 40; and Isaac Ovid, 28, the U.S. attorney’s office said.
Riddle and Smith will be sentenced June 25.
Reach reporter Anna Gustafson by e-mail at firstname.lastname@example.org or by phone at 718-260-4574.
©2010 Community Newspaper Group
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